Since our ‘Consolidation of Training Providers‘ article was published in last month’s FE News there has been a real increase in the number of people looking to buy and sell training providers. We have received more registrations of interest in the past month on this subject than in the past 2 years combined.
Buyers are showing interest because they can see the long term opportunity of the Apprenticeship Levy, the needs of employers and the lack of quality supply available for large employers. Typically buyers want to purchase Prime contractors but that is not true in all cases. There are some larger providers prepared to offer a ‘home’ to good quality smaller providers who bring good delivery capability or complementary geographical coverage to the table.
Those looking to sell are a combination of those left high and dry by the contracts debacle of recent months and those who are now completely disillusioned with the industry and want to exit completely. Most sellers have an unrealistic view of their value – apprenticeship sub contracts carry little value in the current market and people are finding it hard to accept that fact based on all of the investment and hard work that they have put in over the years. Prime Learning Loans contracts on the other hand do carry value and are much in demand.
The biggest concern right now is for those who do not have a ‘lifeboat’ to get them across the stormy waters of the next 6 months. Whether that is an
ESF contract, a large ‘carry in’ of apprenticeship starts from the previous contracts, sufficient financial reserves or a healthy Levy pipeline, the ability to buy time through this difficult period is important. Many without a safety net are in denial – “let’s wait and see what happens” – every day of avoiding the tough decisions and reducing overheads is more risk for the company, the Directors and the staff.
Selling or merging your business are two options to consider but it will require a reality check of where you are now, the situation you face and an acceptance that your business is worth much less than you previously thought. Two key considerations are the Net Profit that you can demonstrate – and the forward facing contracts you have, whether they be commercial or funded contracts.
Whatever your plan for survival – make sure you have one.
David Kitchen, Managing Director, The Leadership Team